Jul 30, 2014

City's Finances Get Clean Review from Auditing Firm

Thanks to cuts made in 2009, the city's general fund balance—an indicator of the financial health of the city—has rebounded.

City's Finances Get Clean Review from Auditing Firm

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An auditing firm hired to evaluate the city's financial state gave Eagan top marks in a presentation last week.

Eagan's 2011 Comprehensive Annual Financial Report (CAFR) received an unqualified—or "clean"—opinion from auditing firm Kern DeWinter Viere, according to a representative of the firm who spoke at the Eagan City Council meeting last Tuesday.

State law requires that cities of more than 2,500 in population submit an audited annual financial report to the state auditor by June 30 of the following year. Here's a breakdown of important points from the firm's 160-page financial report—which tracks the city's revenues, spending and assets:

  • The general fund balance—widely considered a barometer for a city's overall financial health—has rebounded after hitting a low of roughly $10.4 million in 2008. In 2010, the fund topped out at $13.3 million, but it slipped slightly to stand at $12.6 million in 2011. 
  • Much of that recovery is due to the elimination of 11 full-time equivalent positions—an action city officials took in 2009. The cuts allowed the city to add more than $1 million each year to the general fund balance in 2009 and 2010.
  • This year, the city transferred out $1.5 million for its contribution to the construction of a joint fire safety campus shared between several area communities. For that reason, the city's general fund balance declined by more than $600,000 in 2011.
  • In 2011, the city took in a total of $27.2 million in revenue and spent a total of $26.8 million. The city's expenditures in 2011 were $942,000 under yearly budget projections. 
  • Eagan spent roughly $13.4 million on public safety-related costs last year—more than it did for any other single item in 2011. Parks and recreation-related expenses stood at roughly $4.2 million in 2011, whereas Public Works accounted for roughly $3.4 million. General government spending stood at just over $5 million in 2011.
  • Roughly 66 percent—or roughly $21.1 million—of the city's total revenue came from property taxes. The second largest source of revenue for the city was capital grants and contributions, which totaled roughly 16 percent of Eagan's 2011 revenue. Because of the unreliability of state aid in recent years, the council decided to exclude it from budget projections in 2011.
  • When compared to other Minnesota cities with more than 50,000 residents, Eagan has fewer per capita expenses than many of its peers. Eagan spends $716 per resident each year, according to the auditing firm reports. In comparison, Plymouth spends $749 per resident, Burnsville tallies $899 per resident, Bloomington spends $1,293 per resident and Minneapolis forks over $2,678 per resident, the firm said. Only Blaine, Lakeville and Coon Rapids came in under Eagan, spending $622, $654 and $669 per resident, respectively.
  • Several of the city's enterprise funds, including the aquatic facility fund and the civic arena, continue to operate at a loss. The city's fund had lost roughly $52,000 in 2011, compared to an operating loss of roughly $192,000 for the fund and roughly $357,000 for the in the same year.
  • The city has maintained a AAA bond rating from Moody's. Only 6.28 percent of cities nationwide attained a AAA bond rating in 2011. The rating is the highest a city can earn.

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